Bill Powers'

COLD, HUNGRY AND IN THE DARK:

Exploding the Natural Gas Supply Myth

and

Richard Heinberg's

SNAKE OIL:

How Fracking's False Promise of Plenty Imperils Our Future

(Post Carbon Institute, July 2013, 151 pages, $11.66)

Reviewed by Frank Kaminski

There has always seemed to be something deeply wrong with fracking for oil and natural gas. In recent years, of course, it has come under fire for its harm to human health and the environment. But even before that, discerning energy experts didn't really buy into fracking's supposed potential to give America an additional Saudi Arabia's worth of oil. Its cost, in terms of capital, energy and materials, was simply too great to be borne sustainably. Well, now we have two rigorous studies that confirm this skepticism, in the form of Richard Heinberg's book Snake Oil and Bill Powers' Cold, Hungry and in the Dark. These books show that, in addition to being absolutely abhorrent in its effects on the land, people and animal life, fracking is a commercial flop, the latest in a line of highly leveraged speculative bubbles. Indeed, in America at least, its gold rush days are well and truly over.

Heinberg and Powers have both conducted thorough, independent research that relies neither on industry hype nor the abstract models of economists, but on hard facts. The publisher of Heinberg's book, Post Carbon Institute, purchased access to proprietary production figures for 63,000 wells from 31 shale plays across the country. This represents by far the largest sample of data ever examined on fracked wells in America. Heinberg's conclusion is that shale gas production will peak and enter a terminal decline by the end of this decade. As for Powers' analysis, it likewise reviews historical production numbers to forecast future trends, but arrives at an even starker picture. Powers sees shale's decline beginning as soon as right now and coming no later than 2015.

Both authors admit that fracking has significantly changed America's present energy situation. In a span of just a few years, the decades-long decline in U.S. oil production has been not only arrested, but to a large extent reversed, by tight oil from fracked shale. Similarly, the nation has gone from having a looming natural gas crisis a decade ago to having a natural gas glut. What the authors take issue with is the idea that this shift represents anything but a transitory, last-ditch spree. They're certain that the days of this boom are numbered. Further, they argue that because of the peculiar nature of the geology and economics underlying this boom, its ending will be alarmingly abrupt.

Powers' book came first, starting out as a research project in late 2009. Deeply skeptical of all the shale hype, Powers decided to take a look at its true potential for himself. He spent the next three years looking extensively at state-by-state production figures released by the U.S. Energy Information Administration (EIA), as well as talking with geologists, petroleum engineers and other experts. What he learned was that official estimates of shale gas reserves were off by as much as a factor of 20. Shale promoters arrived at their impressive figures by examining the data for a few highly productive sweet spots, then extrapolating these numbers across all areas. When this statistical sleight of hand was corrected, America's alleged 100-year supply of gas dwindled to a mere five-to-seven-year supply. Indeed, the data now show that the sweet spots are much smaller than originally estimated, and that only one of them, the Marcellus formation in Pennsylvania, has yet to peak or plateau.

The "100-year supply myth," as Powers refers to it, was born of a deliberate statistical misinterpretation. The statistic being fudged is the estimate, by a group of geologists and petroleum engineers known as the Potential Gas Committee (PGC), that the United States has up to 100 years' worth of "potential natural gas resources." The PGC takes great pains to emphasize that this figure represents resources and not reserves, but the distinction never makes its way into the news; instead, reporters simply trumpet "100 years of gas." This is hugely misleading, since reserves–which consist of gas that has a high probability of being extracted economically–can sometimes account for only a few percent of the total theoretical resource.

Cold, Hungry and in the Dark presents numerous other awkward facts that run counter to all the boisterous shale gas optimism. Perhaps the most telling of these is that, despite the great increase in domestic fuel supplies brought about by fracking, America still relies on substantial gas imports from Canada. This is something ignored by those who see the nation on the brink of becoming a net gas exporter. Another awkward reality seldom mentioned in the media is that the capital costs of sustaining current production are enormous and ever-escalating. This is because new discoveries are growing progressively smaller and more difficult to find and extract. Moreover, we're fast heading toward a point at which it will be impossible to sustain present production regardless of economics or new technologies.

As many people know from the news coverage, hydraulic fracturing, or "fracking," is the name of the technology that has made shale gas commercially viable. Powers' book provides a succinct account of how fracking works and how it evolved from its invention in the 1940s to its current status as a widely used oil and gas production technique. Fracking is used in wells that can't be produced with traditional methods because they're in rock that has low porosity and low permeability. In rock formations of this type, the hydrocarbons don't flow easily toward the wellbore and must be coaxed out using explosives, chemicals and massive injections of sand and water.

The grievous harm that fracking has done to life, health and property across the nation is by far its most troubling aspect. We're ruining aquifers and habitats, as well as condemning people to premature deaths from cancer and nervous system damage, in exchange for just a few-year boost in fuel production. While Powers doesn't go into as much detail as he could on this vital topic, he does cover all the major points. On the issue of water contamination, he speaks to the millions of gallons of water required for each fracked well, only about half of which is able to be collected and disposed of at the end, once it's in its "produced" state. He also cites a 2011 Duke University study that found water wells located within a kilometer of fracking operations to be 17 times more polluted with methane than water wells situated more than a kilometer away. And he touches on the hundreds upon hundreds of fines levied against shale gas operators for environmental violations.

In spite of what they tell the public, the major players in America's shale gas boom are seeing the writing on the wall. Chesapeake Energy, the world's biggest shale gas operator, is fleeing the gas fields in favor of more oil- and liquid-weighted projects, which tend to be a surer investment. Many other companies are following suit. Powers argues that their retreat from shale gas, together with growing demand for natural gas and the additional pressure that will be placed on gas supplies by new coal plant emissions regulations, will leave us "cold, hungry, unemployed and in the dark. Not a great way to go through life."

The author has many thoughts on solutions, all of them worth heeding–with the caveat that they won't be able to make the crisis go away, but will merely make it more survivable. First, Power's sees some relief coming in the form of solar, wind, geothermal and other alternative energy sources that have steadily been growing more and more competitive with natural gas, as well as from increased efficiency of the electricity grid. He is particularly adamant about the potential of advancements in superconducting technology to increase the grid's efficiency. He points out that there are enormous efficiency gains to be had in this area, since the utility industry currently wastes nearly 80 percent of all the energy generated by gas, coal and uranium in the course of transmitting and converting it.

This book begins and ends with a well-known quote attributed to Mark Twain: "History does not repeat itself, but it does rhyme." Powers says he's particularly fond of this quote because it reflects his take on how the gathering natural crisis will compare to the natural gas shock of the 1970s, the first in our nation's history. As in the 70s crisis, we're going to see the demand for gas outstrip supply and gas producers struggle in vain to keep up, in spite of stratospheric price increases. However, unlike in the last crunch, we won't be able to alleviate this one with massive rollouts of nuclear and coal-fired power plants, since we lack the capital, time and political will to do so. Thus, this new crisis will be far more severe than the first one. Our national leaders would do well to read Powers' book and heed its admonitions now, while there's still time to brace for the coming shock.

Richard Heinberg's slim, yet comprehensive Snake Oil covers all the same material as Powers' book, but with Heinberg's characteristic aplomb. One of the things I've always liked about Heinberg is the way he combines deep scholarship with being down-to-earth. He was once on a radio program in which callers voiced woefully off-base objections to his basic points, and he handled it superbly. Assured by one guy that the decline of oil won't pose a problem for society because enterprising people like this guy will just find another way to get around, Heinberg began his reply, "Right, well, it sounds like you're the type of person who would do well in a crisis situation. You have a great can-do attitude, and I salute that."* Kinder and more diplomatic remarks, in the face of such absurdity, couldn't be imagined. Perhaps serving as an ambassador is another calling for Heinberg.

This affable demeanor shows in his acknowledgements section for Snake Oil, which credits the more than 300 people who helped sponsor, edit and peer-review the manuscript. Producing Snake Oil was an experimental and highly collaborative effort inspired by the notion of a "community engagement" model of publishing. The collaboration began with the study mentioned earlier, by geoscientist David Hughes, of production data from America's 63,000 existing fracked wells, and extended to people at all other stages in the book's unique production cycle. The publisher is not a major mass-market house, but rather a non-profit think tank called Post Carbon Institute (PCI), where Heinberg is a senior fellow. And you won't find the book in stores; it must be printed on demand. While some readers might be deterred by this inconvenience, those who aren't will be glad that they waited for the book.

David Hughes' original report, titled "Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?," ran on PCI's Web site on February 19, 2013. Its chief finding is earnestly expressed in its executive summary: "Despite the rhetoric, the United States is highly unlikely to become energy independent unless rates of energy consumption are radically reduced." Hughes argues that in order to achieve such reductions, our society must adopt a whole new "energy dialog." People need to be made aware of the finite nature of fossil fuels and the peril that awaits us if we don't make a concerted effort to move beyond them.

Heinberg does a superb job encapsulating the key points of Hughes' paper and describing them for a non-technical reader. One theme that stands out in particular is the extremely high decline rates of the oil and gas wells to be found in shale fields. Hughes' study found that production from shale gas wells drops between 80 and 95 percent within three years after peak production. The reason for these precipitous declines is geological. With a conventional oil field, the composition of the rock is such that the field can be kept productive for decades even after its peak, using a range of advanced recovery methods. However, oil and gas fields that are in shale formations are a different story–they're pretty much done after the first pass. The impermeability of shale rock prevents more oil and gas from flowing into the fractures to replace what was first collected.

In addition to its sections summarizing Hughes' study, Snake Oil also covers the history of fracking, its human and environmental impacts and who really benefits from it. On each of these fronts, the book manages to probe deeper than Powers' book in spite of its shorter length (Heinberg has a gift for efficient, lucid writing). On the subject of human and ecological casualties, one statement sums up Heinberg's view beautifully: "[A]s society extracts fuels from lower and lower levels of the resource pyramid, it must use ever more extreme measures, and more things can go wrong."

For a while now, it has been fashionable to promote shale gas as a climate-friendlier alternative to coal, which has long been deemed to be the dirtiest of the fossil fuels. However, Heinberg argues that the truth might actually be the other way around. It certainly is true that natural gas burns more cleanly in power plants than does coal (plants that burn gas produce 56 percent less carbon dioxide than do plants that burn coal). But sadly, this statistic shows only part of the picture. It ignores the vast quantities of greenhouse gases emitted during the extraction of shale gas. Heinberg cites a study by Cornell University's Robert Howarth, a marine ecologist, in which he found that fracked gas escapes into the atmosphere at 190 times the rate of conventional gas during the extraction process. Because natural gas is 20 to 100 times more potent as a greenhouse gas than carbon dioxide, this is a huge deal.

Fracking's impact on water supplies is equally alarming. Those who have seen Josh Fox's documentaries Gasland and Gasland II will never forget the scenes in which homeowners ignite their sink taps just to show how contaminated their water has become with methane. In Snake Oil, Heinberg presents some equally shocking examples of harm to our nation's water supplies from fracking. For example, he describes how, in the already water-stressed state of Texas, water has been denied to farmers because the demands being placed on it by fracking operations are so great. He also recounts some terrifying findings related to the radioactivity of produced water. He cites studies showing that the produced water is highly radioactive–many times too radioactive to be dealt with at municipal treatment plants or safely disposed of in landfills. This raises the horrifying possibility that entire cities could end up drinking radioactive water.

With oil and gas companies losing money hand over fist on U.S. shale developments, it's fair to ask whom shale fracking really benefits. Heinberg says that the ones benefiting are the Wall Street bankers who first inflated the shale gas market. The losers are the oil and gas companies (except for a lucky few that are operating in core areas of the shale plays) and everyday people whose retirement accounts are being sacrificed for the sake of this latest speculative bubble.

Snake Oil is candid enough not to suggest solutions to the energy crisis from which fracking has bought us a temporary reprieve. Instead, it describes possible future scenarios and steps that we all can take in order to adapt to our new reality. Above all, the book stresses the need to change our perceptions about what constitutes a good life. We humans lived happily for thousands of years without modern fossil fuel-powered technology; and our task now is, in Heinberg's view, to relearn how to live this way. We have no choice in this matter, since nearly every resource that made our present society possible is declining. Yet we have an abundance of choices as to what we do with the challenges and opportunities that the transition presents.